Correlation Between Farglory Land and Cathay Real
Can any of the company-specific risk be diversified away by investing in both Farglory Land and Cathay Real at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Farglory Land and Cathay Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farglory Land Development and Cathay Real Estate, you can compare the effects of market volatilities on Farglory Land and Cathay Real and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Farglory Land with a short position of Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farglory Land and Cathay Real.
Diversification Opportunities for Farglory Land and Cathay Real
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farglory and Cathay is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Farglory Land Development and Cathay Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Real Estate and Farglory Land is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Farglory Land Development are associated (or correlated) with Cathay Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Real Estate has no effect on the direction of Farglory Land i.e., Farglory Land and Cathay Real go up and down completely randomly.
Pair Corralation between Farglory Land and Cathay Real
Assuming the 90 days trading horizon Farglory Land Development is expected to under-perform the Cathay Real. In addition to that, Farglory Land is 3.0 times more volatile than Cathay Real Estate. It trades about -0.09 of its total potential returns per unit of risk. Cathay Real Estate is currently generating about -0.16 per unit of volatility. If you would invest 2,385 in Cathay Real Estate on October 25, 2024 and sell it today you would lose (70.00) from holding Cathay Real Estate or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farglory Land Development vs. Cathay Real Estate
Performance |
| Timeline |
| Farglory Land Development |
| Cathay Real Estate |
Farglory Land and Cathay Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farglory Land and Cathay Real
The main advantage of trading using opposite Farglory Land and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farglory Land position performs unexpectedly, Cathay Real can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cathay Real will offset losses from the drop in Cathay Real's long position.| Farglory Land vs. Highwealth Construction Corp | Farglory Land vs. Huaku Development Co | Farglory Land vs. Chong Hong Construction | Farglory Land vs. Taiwan Fertilizer Co |
| Cathay Real vs. Cathay Financial Holding | Cathay Real vs. Nan Ya Plastics | Cathay Real vs. Chang Hwa Commercial | Cathay Real vs. China Development Financial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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